Mobile Operators Need More From LTE as it Turns Tween

Stefan Raab

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LTE is becoming a tween this year. And growing up is never easy.

It’s been 10 years since the telecommunications standards body 3GPP kicked off standardization of LTE, and the wireless technology is square in that awkward stage between being a fun-loving kid and a full-on teenager. That means LTE can’t just coast on its youthful appeal anymore.

As the parent of a tween (my beautiful daughter, Katrina, turns 12 this year) I am well aware of the challenges of tween life: There’s a big jump in responsibility, awkward growing pains, the development of self-expression and a lot of social tension. LTE is facing many of the same trials, as mobile operators expect more out of the technology.

Tech consultant Chetan Sharma predicted in Operator’s Dilemma (and Opportunity): The 4th Wave that mobile operator monetization would eventually come mainly from data access, and it’s happened. The chart below, from Sharma’s recent 2014 Mobile Market Update, highlights how data monetization crossed the 50% mark in 2014. Sharma also notes in the update that in 2014, U.S. revenues from Over the Top (OTT) applications and services (Skype and YouTube, for instance) surpassed both voice and data revenues. He added, “The operator share of the U.S. mobile industry revenues fell below 50% for the first time since the birth of the industry.”

As mobile operators figure out ways to recapture revenue, they must turn to LTE. It’s leaving its carefree childhood where everyone loved it because it was new (and fast). It now has to earn its keep on its own merits.

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The investment in LTE to date certainly justifies asking more out of it. The U.S. Federal Communications Commission just auctioned a significant amount of spectrum. Mobile operators spent an astronomical amount of money to feed the growth of LTE. The following graph from Stephen Wilkus of Spectrum Financial Partners shows how spectrum has gone from $0.35/MHz/POP in the early days of LTE to over $2.65/MHz/POP in 2014. This means that in the lucrative J-Block, a pair of 10MHz wide radio channels, operators spent on average $53 per man, woman and child covered.

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After spending big money on it, mobile operators are building on LTE and trying to find a balance of services to enable them to both differentiate against and compete with OTT players. With the launch of the iPhone 6, Apple brought voice over LTE (VoLTE) to the mainstream, opening up one revenue option for mobile operators. They are also looking at other services like enhanced messaging and network analytics.

Children often spend a lot of time playing alone in their own sandbox, but by the tween years that changes to socializing in groups. Similarly, with the growth of LTE and LTE-based services, limiting service to an operator-owned and run network is no longer enough. The time has come for LTE roaming to expand both in-country footprint and enable international travel. Equinix can help with that.

Our worldwide footprint of network-, content- and cloud-dense International Business Exchange ™ (IBX ®) data centers offers the interconnection mobile operators need to navigate the challenges of LTE’s tween years. We enable instant, direct, secure connections between a range of ecosystems in all the top markets globally. That means Equinix can help connect mobile operators to pretty much any of the partners and customers they need to reach as they work to make sure LTE earns its keep.

Contact us to learn more or schedule a meeting with one of our Global Solutions Architects.